While the marketers in India can heave a sigh of relief now, the countryâ€™s booming small towns and villages also have a cause to cheer.Â This is due to the new simpler socio-economic classification (SEC) revealed recently by the Media Research Usersâ€™ Council (MRUC) and Market Research Society of India (MRSI).
The new SEC will have a single grading system for both urban and rural India as opposed to the existing system which divided it into two separate categories. While the urban system had eight grades and was based on occupation and education of chief earner, the rural SEC system had four grades and was based on education of chief earner and material used in construction of dwelling.
The new system classifies Indian households by changing one of the two existing parameters. Educational qualifications of the chief wage owner in the household remain as one of the key parameters but the second parameter, namely occupation of the chief wage earner, has been done away with to introduce a new one – Number of Assets Owned, out of a pre-specified list of 11 assets. These include electricity connection, laptop or a personal computer, refrigerator, two-wheeler, ceiling fan etc. Based on these two parameters, each household will be classified in one of 12 SEC groupsâ€”A1, A2, A3, B1, B2, C1, C2, D1, D2, E1, E2 and E3 and these are applicable to both urban and rural India.
The new SEC system aims to remove regional distinction and at the same time synchronise pan-India consumer understanding on same parameters in the two markets. Pankaj Mishra, Partner at MART, a consultancy and knowledge based organisation on emerging markets, feels that the use ofÂ a single system for urban and rural will â€œsimplify life of marketers as they can draw parallels and do effective market planningâ€. In the same breath though he feels that few important assets from rural perspective should have been included like access to financial services (banking/MFI/SHG loan), mobile phones, tractor, DTH connection etc.
According to Lloyd Mathias, Chairman of MRUC and President, Corporate Monitoring, Tata Teleservices Limited, â€œin 2006, extensive research and inputs from industry experts had thrown up a burning need to revisit the classification system, given that the market environment, as also consumer profiles, preferences and attitudes had undergone a sea-change over the last three decades.â€ He further adds that â€œit was these findings that led us to set up a core team to work on putting together a new SEC system that would be a true reflection of the actual standing of Indian households.â€
While putting up the new system in place, it was ensured that the questionnaire should be simple and easy to code and grade for the interviewer At the same time, it had to be easy to answer and not too intrusive for the respondent.
The questionnaire consists of just two questions, the first of which has two sub-parts. This, along with the list of assets, is tallied together to decide the group the person belongs to. The formulation of the new SEC system has largely been done using the Indian Readership Survey (IRS) database. The developmental work has also used IMRBâ€˜s Household Panel data.
Meanwhile, there is a set of marketers that feels that the set of consumer durables on the list may not be a right measurement tool. Ajay Kakar, Chief Marketing Officer â€“ Financial Services, Aditya Birla Group, is one of them. â€œThis system reports a slight drawback in terms of selection of consumer durables. Unlike education and occupation, durablesâ€™ consumption tends to change much faster, leading to increased monitoring by the research agency to be able to adjust the survey accordingly each year.â€
An often heard criticism of the erstwhile SEC system was the lack of enough discrimination. In that respect, this new SEC system does progress further by providing 12 grades of discrimination. â€œThe urban system which used to classify into eight grades and the rural system which classified into four grades, both now have higher degree of discrimination with this 12-grade system,â€ says Premjeet Sodhi, President â€“ The Collaborative, Lintas Media Group. However, looking at it from a different perspective, Mishra finds this problematic in the new system. He says, â€œThe number of classes should have been kept less. Splitting into 12 classes from four to five used earlier, makes things difficult from practical perspective.â€
As the new system gets into the execution stage, marketers will surely get a clearer picture of the new contemporary grading system, or will they? That remains to be seen but few are complaning as of now.